Square Payroll vs Gusto: 2 Platforms Compared

The first payroll I ever ran was for a small team where half the staff were hourly and every hour they worked lived inside a point of sale terminal. Every other Monday I exported a report, retyped the numbers into a payroll app, and hoped I had not fat-fingered a decimal. I got it wrong twice in the first quarter. Nobody was harmed and both corrections were small, but the experience taught me something that no feature grid teaches: the payroll product that wins is usually the one that already has your hours.

That is the honest frame for this comparison. Square Payroll and Gusto are both credible full-service payroll products for a US small business, both publish their prices on a public page, and both bill month to month with no contract. They are not, however, the same kind of purchase. One is a payroll module attached to a point of sale system used by restaurants, retail shops, and salons. The other is a payroll company that has spent a decade building HR and benefits around the pay run.

So the useful question is not which one is better. It is which one is better for the shape of your business. Below is what each costs at 5, 10, 25, and 50 people, what sits in the base plan of each, where each is genuinely stronger, and the situations that point clearly at one over the other. There is a right answer for a coffee shop with tipped staff, a different right answer for a salaried agency that wants handbooks signed, and a third for a company with people in three states and a tight budget.

Square Payroll vs Gusto at a glance

The structural difference shows up before you reach a single feature. Square sells one full-service payroll plan and one contractor plan, and that is the entire menu. Gusto sells three payroll tiers plus a contractor plan, and moves capability upward through them. A flat menu means you never have to model an upgrade. A tiered menu means you can buy more later without changing vendors.

Origin explains most of the rest. Square Payroll grew out of a point of sale business, so it assumes hourly staff, tips, timecards, and uneven week-to-week hours. Gusto grew out of payroll and benefits, so it assumes documents to sign, insurance to administer, and an HR person or a founder acting as one. Both file your employment taxes, both run unlimited payrolls, and both let you cancel whenever you like.

Read that table for placement rather than presence. Three rows decide most purchases. Square includes multistate payroll in its only plan while Gusto reserves it for Plus. Square captures timecards in the point of sale and the Team App while Gusto puts time tracking on Plus. And custom document signing, the thing that turns payroll software into something you can onboard with, exists on Gusto and does not exist in Square Payroll.

One more row deserves attention because it is unusual in this market. Square bills for people actually paid in a given month, and it bills after the month closes rather than in advance. For a business with a summer crew or a holiday crew, that is not a rounding difference. It is the difference between paying for a roster and paying for a payroll.

What Square Payroll and Gusto actually cost

Both vendors use a monthly base fee plus a per-person fee, which makes them directly comparable. That is rarer than it should be in payroll. The table below runs published rates at four headcounts, and includes the contractor-only options because that comparison is lopsided enough to matter.

Three things fall out of that grid. First, the entry comparison is a clean $14 a month at any size, because the per-person fee is identical at $6 and only the base differs. That is $168 a year, which is real but rarely decisive on its own. Second, the contractor comparison is not close at list price: Square charges no base fee, so a business paying 10 contractors pays $60 a month against $95 on Gusto, and the gap widens as you scale. Gusto currently discounts its contractor base to $0 for the first six months, which erases that gap temporarily, so check whether the promotion is still running and price month seven before you decide.

Third, and this is the number that actually decides most of these comparisons, the moment you need payroll in a second state or time tracking, Gusto moves you to Plus and the arithmetic stops being close. At 25 people that is $380 a month against $185 on Square, a difference of $195 every month for capability Square includes as standard. When you model payroll software, price the tier your requirements force you into, not the tier at the top of the page.

The costs that sit outside the plan price

Neither headline number is the whole bill. Both vendors move meaningful functionality into add-ons and partner services, and the items below are the ones small employers most often discover after signing rather than before.

Two of those lines are bigger than they look. The Square scheduling row matters because clocking in is free but building schedules and locking down permissions sits in Square's paid software plans, published at $49 per location per month for Square Plus and $149 for Square Premium. If you run three locations and need real scheduling, that is a second subscription. On the Gusto side, priority support is the one buyers underestimate: at 25 employees the add-on costs $105 a month on top of a $199 plan, which is more than half the plan again for faster answers.

What you get at the base plan

Both base plans do the core job: unlimited pay runs, calculated and filed employment taxes, year-end forms, and an employee portal. The differences are at the edges, and the edges are where a small employer gets surprised in month two.

Square wins the base plan on payroll mechanics for an hourly business. Timecards, tips, overtime, and labor cost reporting are all in the $35 plan, and multistate filing comes with it. Qualifying businesses can run payroll up to two business days before the pay date, and eligible team members who use Cash App can reach their pay two calendar days early through Instant Deposit.

Gusto Simple wins on the paperwork around the pay run. It files federal, state, and local payroll tax forms, includes employee self-service and basic time off and holiday pay, and gives you an onboarding experience built for a company that hires salaried people and needs the forms to be right. What it holds back is significant for hourly teams: time tracking, next-day pay, custom document signing, and payroll in a second state all live on Plus.

One base-plan detail is easy to miss and worth confirming before you migrate. Square states that it supports payroll tax calculations and filings across all 50 states and the District of Columbia, and that employers can add work locations across local or state tax jurisdictions with taxes calculated, withheld, and remitted for each one. Gusto states that it files federal, state, and local payroll tax forms in all 50 states. Neither publishes a jurisdiction-by-jurisdiction list, so if your employees work in a city or school district with its own income tax, name that jurisdiction on a sales call and get the answer in writing rather than assuming either product covers it.

Both platforms reviewed

Below is the case for each, written as though you were only going to buy that one.

Square Payroll

Square Payroll is the cheapest published full-service payroll in this comparison and one of the cheapest anywhere, and the price is not the most interesting thing about it. The interesting thing is what the single plan contains. Automated federal and state tax filings, multistate payroll, overtime calculation, and labor cost reporting all sit in the $35 tier, with no upgrade path to climb because there is no upgrade path.

The point of sale connection is the real argument. Timecards from Square Point of Sale or the Square Team App flow into the pay run, and tips are calculated and imported with them, which removes the retyping step that produced both of my early payroll mistakes. For a restaurant, bar, or salon that already takes payments through Square, the whole hours-to-paycheck path lives in one system. If you also run tip pooling, that consolidation is worth more than the fourteen dollars a month.

The billing model suits uneven businesses in a way most payroll pricing does not. Square charges for people actually paid in a month, invoices after the month closes, and lets you pause the subscription for up to nine months with taxes still filed during the pause. A business that hires seasonal workers for a five-month stretch pays for the months it runs payroll. The contractor plan takes this further with no base fee at all, so a business paying five contractors pays $30 a month, which is a genuinely different price point from anything Gusto offers. If your workers are contractors, confirm they belong in that category first, because the IRS classification rules apply whichever product you buy.

Benefits are add-ons through partners rather than a native product. Square names SimplyInsured for medical, dental, and vision and Vestwell for 401(k), and says its payroll software integrates with providers so you can also offer workers compensation, with deductions syncing back into the pay run. That is a reasonable arrangement for a small employer, but it is a narrower benefits story than Gusto tells, and Square publishes less detail about it.

The weaknesses are specific and worth checking against your own situation. Square documents four things it does not support: paying one employee who works in more than one tax jurisdiction, courtesy withholding, multiple EINs under a single Square Payroll account, and closing a location in one tax jurisdiction to open in another under the same EIN. There is no HR layer: no custom document signing, no offer letters, no performance tools. And Square publishes no free trial, so the first thing you experience is a bill.

Gusto

Gusto is the most common first payroll purchase for a US small business, and the reasons hold up. Pricing is public at every tier, setup is genuinely self-serve, the employee experience is the best in this price band, and you pay nothing until you press the button that runs your first payroll, with no commitment and no contract. For a founder who has never run payroll, that combination removes most of the risk from the decision.

The Simple plan is a complete payroll product for a single-state team. Unlimited runs, full-service tax filing that covers federal, state, and local forms, employee self-service, and basic time off and holiday pay. What it does not carry is anything that assumes hourly work or a second state, and Gusto is explicit that Simple is the single-state tier.

Where Gusto separates itself is everything wrapped around the pay run. Plus adds multi-state payroll, time tracking, next-day pay, performance and compensation management, and the ability to send custom documents such as offer letters and handbooks for signature, which is the feature that turns a payroll tool into something you can onboard with. Premium adds a dedicated service advisor, access to certified HR experts, custom reports, priority support, payroll migration and account setup, and free integration of your existing insurance broker. Nothing in Square Payroll competes with that layer.

Benefits are the other differentiator. Gusto sells health, dental, and vision alongside payroll, and if you already have a broker you like, it will integrate them for $6 per eligible employee per month, free on the Premium plan. Deductions and contributions flow into the pay run without a separate system, which is the part small employers most often get wrong when benefits live somewhere else.

The weaknesses are all about tier placement. Multi-state payroll and time tracking are the two capabilities small businesses most commonly need first, and both are included only from Plus upward, which nearly doubles the per-person rate from $6 to $12. Time tracking can be bought as an add-on on Simple, but Gusto does not publish its price, so the honest budget line is the Plus tier. At 25 people that is a jump from $199 to $380 a month triggered by a single remote hire or a single time clock. Priority support on Simple is an extra $30 per month plus $3 per person, and on Plus it comes bundled with HR resources at $8 per person, so the cheapest Gusto plan is also the one where you wait longest for an answer. And unlike Square, Gusto has no published mechanism for pausing a subscription through a slow season.

Where each one is genuinely stronger

Strip out the marketing and the real differences are few, specific, and easy to test against your own situation.

The multistate row is the one worth sitting with, because it reverses the usual pattern. The cheaper product here is also the one that includes the capability most small businesses grow into, while the more expensive product charges an upgrade for it. If you expect anyone to work across a state line in the next year, the comparison is $185 against $380 at 25 people, and no amount of HR polish closes a $195 monthly gap for a business at that size.

The honest counterweight is what happens to your paperwork. Square Payroll runs payroll and stops. It has no signed documents, no offer letters, no performance layer, and it will not help you prove that a handbook was acknowledged. Gusto carries that work from Plus upward. If your recurring pain is chasing signatures rather than calculating hours, the cheaper payroll product is solving the wrong problem.

How to choose between Square Payroll and Gusto

Five questions settle this faster than any feature list. Answer them before you open either signup flow.

Whichever way you go, the mechanics of the move matter as much as the choice. Switching payroll companies is cleanest at a quarter boundary and cleanest of all on January 1, because quarterly employment tax returns have to reconcile to year-to-date totals and splitting a quarter across two systems means two partial filings that have to agree. Export full pay history, confirm every state account number transfers, check taxable wage base progress per employee, and run one parallel cycle before going live. The IRS guidance on depositing and reporting employment taxes is the reference for what the new system has to get right.

And keep one thing in view regardless of which logo ends up on the invoice. The IRS is explicit that employers remain ultimately responsible for withheld income tax and for both halves of Social Security and Medicare, and that if a third party defaults the employer still owes the deposits and the returns. Neither of these vendors publishes a tax penalty protection guarantee, so read the notices, reconcile your quarterly payroll tax filings, and treat the IRS position on outsourcing payroll as the baseline for how much comfort a service contract can actually give you.

Frequently Asked Questions

Is Square Payroll or Gusto cheaper?

Square Payroll, at every headcount. Both charge $6 per person, so the entry difference is a flat $14 a month: $95 against $109 at 10 employees and $335 against $349 at 50. The gap widens sharply when a second state or time tracking enters the picture, because those move Gusto to Plus at $80 plus $12, which is $380 a month at 25 people against $185 on Square. For contractor-only businesses Square charges no base fee at all, against $35 plus $6 on Gusto, though Gusto currently discounts that base to $0 for the first six months.

How much does Square Payroll cost per month?

Full-service payroll is $35 per month plus $6 per person paid, and contractor-only payroll is $6 per person paid with no base fee. Both include unlimited pay runs and no long-term contract. Square bills for people actually paid and invoices after the month closes, and the subscription can be paused for up to nine months with taxes still filed. Paper W-2 and 1099 copies cost $3 per mailed form.

How much does Gusto cost per month?

Simple is $49 per month plus $6 per person, Plus is $80 plus $12, and Premium is $180 plus $22. Contractor Only is $35 plus $6 per contractor with the base discounted to $0 for the first six months, billed only in months when contractors are paid. Priority support is an add-on at $30 per month plus $3 per person on Simple and comes bundled with HR resources at $8 per person on Plus, and integrating your own insurance broker is $6 per eligible employee per month, free on Premium. Gusto charges nothing until your first payroll run.

Does Square Payroll handle multi-state payroll?

Yes, and it is included in the single plan rather than gated behind an upgrade, which is the biggest structural difference between these two products. Square remits and files with the applicable agencies for each state where you process payroll. Three limits are worth confirming first: it does not support paying one employee who works in more than one tax jurisdiction, does not offer courtesy withholding, and does not support multiple EINs under one Square Payroll account.

Does Gusto Simple include time tracking?

Not as standard. Time tracking is included from Plus at $80 per month plus $12 per person, alongside multi-state payroll and next-day pay. On Simple it is listed as a paid add-on with no published price, and Simple otherwise covers single-state payroll, tax filing, employee self-service, and basic time off and holiday pay. For an hourly team that upgrade is expensive: $380 a month at 25 people against $199 on Simple. Square puts clock in and clock out in the Team App and point of sale with no extra payroll charge, which is why hourly businesses often land there.

Can I use Square Payroll without Square Point of Sale?

Yes. Square confirms you can sign up for payroll without processing payments through Square and without using any other Square service, at the same $35 per month plus $6 per person paid. You do lose the reason many businesses choose it, since the timecard and tip import is what removes manual entry from the pay run. Without that, the comparison against Gusto comes down to price, tax coverage, and HR depth rather than integration.

Which is better for a restaurant or retail shop?

Square Payroll in most cases, because tips and timecards import from the point of sale, overtime is calculated automatically, and labor cost reporting sits beside sales in the same dashboard. Gusto is the better answer for a group that needs handbooks and offer letters signed, since custom document e-signature is a Plus and Premium feature that Square Payroll does not offer at any price.

Does using Square Payroll or Gusto make them responsible for my payroll taxes?

No. The IRS holds employers ultimately responsible for withheld income tax and for both halves of Social Security and Medicare, and if a third party defaults the employer still owes the deposits and the returns. Neither vendor publishes a tax penalty protection guarantee. Both publish broad coverage: Gusto says it files federal, state, and local payroll tax forms in all 50 states, and Square says it handles payroll tax calculations and filings across all 50 states and DC, including work locations in local tax jurisdictions. Neither lists the specific local taxes it files, so confirm yours before migrating.